Visiting an oil refinery, getting a sense of the oil industry–surprisingly strong–and visiting a fire at a gas station.

I had the best reporting day I’ve had in a while.  I started as I always do at this house where the Central Bank and the Ministry of Finance people go to hang out, since there is no longer a Central Bank or a Ministry of Finance.  They just sit there all day and talk.  I’ve been told this guy Mr. Karim is the only one of them meeting with Americans.  There doesn’t seem to be any way to actually speak with the Americans to find out how they are restructuring the economy of this country.  So, every day, the first thing I do is drive to this house and ask for Mr. Karim.  And every day I’m told I just missed him, he’ll be back tomorrow.  Now, this is partly my fault.  They always tell me to come at 9 and I never seem to get out of bed ’til 10. But, hey, I’m working hard and need the rest.  Today is May Day, a national holiday in Iraq.  I was surprised that most government workers are taking this holiday off.  Surprised, because there is no government.  They’re not getting paid.  They’re just sitting around waiting.  But they still take the holiday off.  Makes sense, I guess.  Anyway, there were only three people standing in front of the house and, to my shock, one of them was Mr. Karim.  I shouldn’t have bothered. He wouldn’t talk to me.  But he did tell me to come back on Saturday at 2.  The Americans, some technical people from the Treasury Department, will be there to meet with the technical people from the ministry of finance.  So, I’ll go there at two.

Next stop was the Ministry of Oil.  This is the only ministry that wasn’t looted and raided by Iraqis.  This is because American troops protected the building from the first days. This has encouraged the belief, widespread about Iraqis as well as people everywhere (though not me), that this war was all about oil.  A soldier told me I can’t go in.  There is a meeting there.  There’s always meetings there.  But reporters can’t cross the concertina wire outside.  I was told, again, to come back Saturday.  I will.  I was getting frustrated.  It seemed like every day I’d go around and be told that the Americans don’t want anyone to talk to anyone.

We drove on to the oil refinery in Baghdad, the Daura Refinery.  There were American troops at the entrance, so I figured I’d be sent away. But they didn’t even look at me or talk to me.  Iraqis are in charge there.  I was told I could go in and meet with the general manager.  On the way in, I talked with an army guy from the civil affairs division.  These are the folks who are supposed to be doing the first phase of reconstruction.  The way army press people sell the civil affairs brigades you’d think they’re everywhere in Iraq, rebuilding the country by hand.  But every time I meet a civil affairs guy, like this one, they’re doing something really small and don’t have any idea what’s going on.  He kept asking me questions about oil in Iraq.  He was there to buy a truckload of oil so they could spray it on the dusty airfields they’re using to keep the dust from blinding pilots.  When I asked what they’re doing to help the Iraqis, like give them spare parts or technical advice or something, he said they’re still in the assessment phase.  This is what I always hear from these guys.  It’s the assessment phase.  I feel like I made plenty of assessments in the first day or two in Baghdad and there are some obvious things that need to be done.  But the army is a big bureaucracy and they need to assess for a longer time than I do.  I just wish all these assessors seemed to understand anything about what is going on.  I’ve been so unimpressed.  The guy, a Major in the reserves, was really nice.  A big public radio fan and excited to talk.  He said he’ll be here one or two years.  He won’t be able to go home to see his family that whole time.  If he’s lucky and he gets a week R&R during the first year, he’ll have them fly to Israel and meet him there.  But he doesn’t know if he’ll have any time off.

The general manager really impressed me.  I have to say I’ve been impressed by all the financial and technical Iraqi professionals I’ve met.  Saddam was a bastard and much of the state apparatus was geared towards spying and torturing and building ornate palaces.  But there are all these ministry technocrats who were actually running a surprisingly well-functioning government.  This guy said he’s had very minimal contact with Americans.  They did ask him to draw on a map where all the gas stations are in Baghdad so they can put troops at them to keep order.  And he’s been told that American companies will come in soon to rebuild all the oil infrastructure and bring up to 21st century standards.  He said he’s really excited about that.  And he’s excited to learn about all the changes that have happened in oil technology since 1980.  he doesn’t know anything about that.  What surprised me the most is that the entire oil ministry is running almost entirely normally.  None of the other ministries are functioning at all. But the oil ministry is working well.  They are well below their full capacity of 3 million barrels a day.  But all the equipment is functioning fine.  They can go full bore any day.  The problems are these strange technical things.  Like his refinery can put out 110,000 barrels a day.  But they can only do 20,000 barrels now.  When you refine crude oil, you heat it up and crack it (I think this is right, don’t quote me) into all sorts of component parts.  Hot crude oil is made up of all sorts of different oil products.  So, heating it, breaks the products up and you can separate out kerosene and car oil and fuel oil and Vaseline and all sorts of products.  Right now, their fuel oil tanks are completely full.  They can’t refine any more crude until the fuel oil tanks are emptied.  The fuel oil is supposed to go to the electricity generating stations.  But the stations are operating at one tenth their capacity because there are so many problems in the wires along the way and if they went to full capacity, they’d overload the system.  Once the electric plants are fully running, the fuel oil can start flowing, and this refinery can start putting out 110,000 barrels.  He said they can get up to the 3 million barrels a day nationwide quite soon, once all these little glitches are worked out.  The goal is to get up to 6 million barrels a day, but that will take years and lots of new equipment, which the Americans are promising.  He said it only costs a little less than 2 dollars to dredge up and refine a barrel.  So, if oil continues to cost $25 to $30 a barrel internationally, Iraq will make a lot of money.  Even now, the oil ministry is self-sufficient.  They are producing oil, even if it’s less than normal, and selling it to gas stations and using the money to pay their staff.  Refineries like this one are getting orders from the same people in the oil ministry who ran things before.  I found this just stunning.  Nothing is working here.  Nobody is getting paid.  The other ministries are waiting until the Americans start giving people $20 a month salary, less than they made before.  But the oil ministry is working just fine.  He said there are 100 gas stations in Baghdad and 80 are now open.  They are supplying one tanker to the government run stations a day and one tanker to the private ones every other day.  This is less than half of the demand of Baghdad and that’s why there are so many problems with oil in the city.  Oil is amazingly cheap here.  It costs 50 dinars a liter, that’s about 2.5 cents.  I don’t know how many liters in a gallon, but it can’t be too many.  So, let’s say a gallon costs 10 cents.  Cheap.  It costs three times that much to refine the oil, but the government kept the price low through subsidization because people can’t afford oil even at these cheap rates.  He said there’s no way to increase the price until peoples’ salaries go way up.  I know the American administration loves the idea of ensuring that all third world people pay a real cost for things like oil and water and medical care.  I think it will be a disaster if they do that too quickly here.

We then went to the actual refinery part.  Now, in Iraq, like everywhere in the Arab world, every time you move to a different office, you walk in, shake hands with everyone there, sit down, drink some tea, have some small talk, and then get to business.  The plant manager at the refinery was a great guy.  He looks like a short Anthony Quinn (he denied this) and has an amazing deep voice and speaks great English.  Like many older Iraqi technocrats, he was sent to England for education.  He said when he was coming up, the oil ministry would pick the 40 best high school students in the country and send them to England and then they’d come back and work.  He said that he does know about the advances in oil production.  He’s been getting technical magazines and catalogues since 1998.  He pointed to his forehead and said it’s all up here.  We need the equipment now.  We talked about the common Iraqi fear that the Americans will take all the oil revenues for themselves.  He said it’s impossible.  It’s too much money and people would notice.  I think that’s right.  I think the US would like to have long-term influence on what happens with Iraqi oil and there’s probably a strong plan to use Iraqi production to lessen the power of the Saudis and OPEC (though Iraq is part of OPEC).  I’m sure there are all sorts of long-term strategic schemes in DC to deal with Iraqi oil. But I don’t think it’s going to be as crude as just taking all the revenue for ExxonMobil or something.  They have to let the money go in to Iraqi coffers.  Half a million barrels a day are for domestic consumption.  The other 2.5 million are traded internationally.  Once sanctions are lifted and the refineries improved, it’ll be 5.5 million barrels a day.  That works out to more than $40 billion a year.  This country could use the money.

He took me to the refinery itself.  He laughed and explained that everything there was built by Americans in the ’50s.  Mostly by Kellogg and Brown & Root, which are now owned by Haliburton, Dick Cheney’s old company.  We laughed a lot about Cheney and how he made money off of every aspect of Iraqi oil. This isn’t entirely fair, since I don’t think he was a major shareholder in the ’50s.  But it is odd.  He said, and I don’t understand how this is possible, that some Haliburton people came to the refinery in the late ’90s and couldn’t believe the machines were still running.  They should have been scrapped 20 years ago.  The man said he was very proud of this, since it shows how great their maintenance is.  But he can’t wait to scrap it all and get new high-tech equipment.  I was at an Amoco refinery in Illinois a few years ago, and it’s so high-tech.  Like a scene from some futuristic movie.  All these clean, colored tubes going everywhere and lots of computers watching everything.  This place is run by hand.  No computers that I saw anywhere.  And so primitive, it seemed.  A big room to heat up the oil.  A big stack to refine it.  Nothing more.  He said there is no unleaded oil in Iraq.  All the car oil has lead in it.  I never even understood what unleaded means, but I’m sure it’s pretty bad for the environment and I guess it fucks up your car.  I’m from New York and we don’t know anything about cars in New York.

We then drove to a gas station.  You can’t believe these stations.  There are lines that go for miles.  Entire streets are closed down because so many people are waiting at these stations.  The other day it took about an hour to drive one long block through the mess created by the stations.  The one we went to today had the usual absurd line.  I talked to a guy about half way through and he said he had been there since 10 am.  It was 3 pm.  I told him he might have to wait another 5 hours or more.  He was quite calmed and good natured and said he doesn’t have anything better to do.  He works for a ministry that isn’t working, so he might as well wait here.  And maybe he won’t get any oil.  You can get black market oil from guys selling it out of jerrycans on the street.  They charge 1300 dinars for 5 liters.  That’s about 5 times what you pay at a station, but still really cheap.  I told him he could do that and not waste a day.  He said he can’t afford the black market stuff.    We walked to the front of the line and there was no oil being pumped at all.  Hadn’t been for three hours.  People were screaming that the manager won’t pump oil because he’s waiting for nighttime when he’ll sell all the oil to black marketers for inflated prices.  Then one pump started and the whole crowd was dancing and whistling and clapping.  Then the pump went off.  Right then, these two American soldiers came up.  It was all very surreal and amazing timing.  The soldiers were really tall and had very clean uniforms, they were a colonel and a major and I’m sure work in a command center somewhere.  They don’t look like fighters.  The Major was incredibly tall and well built, maybe 50 years old.  He walked in to the middle of this huge screaming crowd and started yelling out in Arabic (he’s an American guy named Newman from Texas, his Arabic has a strong American accent but is very good, my translator said).  He told everyone to be patient.  And he quieted them down right away.  It was incredible watching someone take command like that.  The manager came up to him and they talked in half-English, half-Arabic.  The major told the man to start pumping oil.  The man said he needs army security.  So, the major said he would provide security for an hour if the guy pumped gas. (The colonel told me later they were just driving by on their way to a meeting when they saw this big angry crowd and decided to help, they have no mission to protect gas stations.) Then the manager said that he doesn’t want security to pump gas, he wants the army to get all the people out of the station because he just doesn’t want to pump any more gas that day.  All his workers went home because they’re sick of getting beat up by angry drivers.  So, he can’t pump anything.  The soldiers, then, just left.  It was very odd.  They came like they were going to solve everything and then they just walked away.  The crowd was very angry and surrounded the gas station office.  I went in to the office where the head manager was sitting looking exhausted.  I felt kind of scared, all these people surrounding this little office.  So, I left.  The crowd was so angry, but they weren’t doing anything to me.

I got back to my hotel and ran in to a friend who asked if I heard about the big explosion at a gas station.  I ran out and found a translator and we took a cab.  My friend said the explosion was near the National Museum.  It took me a while to realize that my new translator doesn’t speak much English and thought a Museum is a theater.  I realized this after we drove by our third theater and there was no gas station explosion.  We finally saw massive smoke in the distance and followed it.  It’s a huge fire.  The army surrounded the place and wouldn’t let anyone, especially press, near by.  I couldn’t get any information.  I was ready to just leave, but my translator said we could find a better way to see things.  It was now pretty dark out, my first time being out at night in Baghdad, and this was a poor neighborhood.  My friend who was there earlier said the crowd got very ugly and some Iraqis told her she should leave for her safety.  So, I was nervous. But we walked down this dark alley and found some people who took us up the very dark stairs of their house to their roof where I could see everything.  It was so massive a fire.  Two big gas trucks and a whole building on fire.  15 cars burnt to shells.  I saw one body lying in the street.  The Iraqis were saying 60 or more people died.  One guy said hundreds.  The soldiers said it was only 4 who died.  This is typical here.  You don’t know.  The general story was that electricity came back on in the neighborhood and, as often happens, people shot guns in the air to celebrate.  One of the bullets hit a gas tank and the explosion happened.  The Iraqis on the roof were very angry.  They said that Americans can put out a fire in 10 minutes, why are they letting this one burn.  The Americans weren’t actually doing anything to stop the fire.  They were just doing crowd control.  Local fire trucks were handling the fire.  Handling it badly as far as I could tell.  Every ten minutes or so a new truck would come by and shoot foam at the fire. But they kept shooting too high and not hitting the fire at all.  Maybe this is a technique, but it seemed like a fuck up.  The people on the roof with me yelled at them to shoot lower, and then they’d shoot too low.  When they left, the fire was just as ferocious.